March 30 2013

One of the nation’s largest not-for-profit hospital operators is building its own insurance arm to sell health plans directly to employers.

Catholic Health Initiatives, which operates more than six dozen hospitals in 17 states, has hired a half-dozen former insurance executives and acquired the majority stake in a Washington insurer under a push to prepare for coming changes to hospital and physician reimbursement structures. The changes will increase providers’ financial risk in ways that policymakers hope will create new incentives to eliminate waste and improve overall healthcare quality.

The Englewood, Colo.-based system is not alone in jumping into the insurance game. The Detroit Medical Center and Partners HealthCare recently acquired insurers. Two Georgia health systems last December announced plans to launch an insurer within a year. Piedmont Healthcare and WellStar Health System said the newly created insurer would cover their combined 35,000 workers and dependents, and enrollment was projected to grow to 160,000 in five years.

Demands from employers and policymakers to slow health spending are driving healthcare systems’ push into insurance. New initiatives that save money by eliminating waste, improving quality and promoting health require access to data captured by insurers, industry executives and experts say. That data can identify how often and what care patients receive—or don’t—and help providers identify possible targets to bolster care. Competition and consolidation among insurers may also be behind the deals.

CHI—which last year reported 6 million physician visits, 1.3 million emergency room visits and 1.7 million days of hospital care—is building its insurance operations and its capacity to enter into contracts with private insurers for riskier incentive-based contracts that will match the scale of its clinical operations across the country, said Michael Rowan, chief operating officer for the health system.

CHI won’t entirely cut out insurers. “We see ourselves in the future, in some cases, working as we do now with insurance companies,” Rowan said. But the system will continue to acquire health insurers, and in some markets will position itself to compete for employers’ business with a full benefit package and a network of providers inside and outside the hospital.

Deborah Chollet, a Mathematica Policy Research senior fellow, called hospitals’ entry into the insurance market a natural evolution toward more integrated delivery systems. It follows a wave of physician hiring in recent years. Hospitals may also be responding to consolidation among insurers, she said.

But hospitals’ broadening business model isn’t without risk. “It’s a culture shift for them,” Chollet said, one that will require more aggressive use of information technology and new incentives for physicians and hospitals that promote prevention and primary care instead of relying on high-volume delivery of acute and specialty care. “It certainly isn’t impossible, but it’s not something that happens overnight,” she said. “It really is a change in how healthcare is perceived all the way up and down the line.”

CHI’s push is part of a broader strategy to expand its reach and control over healthcare delivery beyond the hospital. In 2010, the system acquired a Cincinnati home health company with 30 locations in three states. Continued hiring has brought the total number of CHI’s employed physicians to roughly 3,000. The health system, which totaled $10.9 billion in revenue last year, wants to generate roughly two-thirds of its revenue from operations other than hospitals in coming years.

Just as hospitals have acquired insurers, health insurers have moved to acquire providers. UnitedHealth Group purchased the independent practice association Monarch HealthCare early last year. Insurer Humana purchased Concentra, an occupational and urgent care clinic company, for $780 million in December 2010.

Earlier this month, CHI closed on its acquisition of the Washington state insurer Soundpath Health for $24 million after the health system bid unsuccessfully to contract directly with Boeing to provide local workplace health benefits. Boeing spokesman Joseph Tedino said the company does not comment on negotiations or proposals. “In the normal course of business, Boeing continues to look for opportunities to improve the quality and control the cost of the healthcare benefits provided to our employees and their dependents,” he said.

The insurer claimed 9% of the Medicare Advantage market in the nine Washington counties where it operated as of last October. Catholic Health Initiatives plans to continue building its Washington state clinical network and insurance capabilities should “any employer in that community” seek to contract directly with the system, Rowan said.

Rowan anticipates employers will continue to move in the direction of contracting directly with health systems as they seek to reduce their healthcare costs. Even though CHI plans to slash $2 billion from its overall cost structure over the next four years, it will continue investing in its new insurance arm. “We think markets can turn in a hurry,” he said.

The across-the-board budget cuts known as sequestration now scheduled to hit in two days would have serious implications for federal workers, including mandatory unpaid furloughs for hundreds of thousands of employees, beginning in April. We have compiled a list of possible agency-by-agency effects, should Congress and President Obama fail to reach a deficit reduction agreement in time to avoid the cuts. We will update the list as more information becomes available.

Agriculture Department: Agriculture Department Undersecretary for Food Safety Elizabeth Hagen told a House Appropriations subcommittee that all 9,212 meat safety workers will be furloughed for 11 non-consecutive days starting in mid-July, Reuters reported. She said that Agriculture was looking for additional savings to avoid and possibly reduce the number of furlough days.

Air Force: The Washington Post reported that employees in combat zones, non-appropriated funds employees, and foreign nationals would be excepted from furloughs. The Post also said that further exceptions would be allowed for “safety of life or property.” An Air Force spokeswoman told Government Executive that all Air Force civilian police, security guards and firefighters would be subject to furlough “except at installations where the manning level is under 25 percent.”

Army: The Army formally clarified its furlough plans in a memo published March 20. Officials wrote that the Office of the Secretary of Defense had excepted employees deployed in a combat zone, non-appropriated fund employees, foreign national employees, political appointees, civilians funded through the National Intelligence Program and Foreign Military Sales workers. The memo also included overtime exceptions for workers ensuring “health, safety, and security of personnel or property.”

Broadcasting Board of Governors: The agency does not anticipate needing to furlough employees this year, according to a memo obtaind by Government Executive. BBG is required to reduce spending by approximately 5 percent, or $37.6 million, by September 30, the memo said. It will do so by freezing hiring, eliminating bonuses, postponing technical upgrades and reducing broadcasts.

Customs and Border Protection: Started sending furlough notices to all 60,000 of its employees on March 7. The furloughs are slated to begin April 21 and will be spread over several pay periods. Full time employees will be furloughed no more than 14 workdays, and part-time employees will have their furlough time pro-rated.

Defense Department: Secretary Leon Panetta on Feb. 20 informed lawmakers that sequestration would force the Pentagon to put the “vast majority” of its 800,000 civilian workers on administrative furlough. The furloughs would begin in late April and would occur one day a week for up to 22 discontinuous work days. (See separate Air Force and Army entries.)

Education Department: Secretary Arne Duncan testified Feb. 14 before the Senate Appropriations Committee that he expected furloughs. “The sequester would … likely require the department to furlough many of its own employees for multiple days,” he wrote in a Feb. 1 letter to the committee.” The letter did not provide an exact number of employees who would be affected.

Environmental Protection Agency: Employees could be subject to as many as 13 furlough days, according to a Feb. 26 internal message from acting Administrator Bob Perciasepe. “We are working to minimize the burden on employees and maintain our ability to do our job,” he wrote. “Decisions are not final yet, but one of the ways in which we are trying to soften the impact is by evaluating the furlough need in phases.” For instance, the agency is looking into requiring four furlough days before June 1, and then reevaluating the budget situation to see if further furloughs are necessary.

Federal Aviation Administration: Almost all 47,000 workers would be furloughed for one-to-two days per pay period, according to Transportation Secretary Ray LaHood and FAA head Michael Huerta. Employees should be prepared for 11 furlough days, beginning as early as April 7, according to a Washington Post update. Air traffic control towers at 100 airports would be closed, and midnight shifts at many smaller airports would be dropped. This could lead to 90-minute delays during peak travel times for flights to major cities, LaHood and Huerta said in their Feb. 22 letter to airline industry groups and unions. The FAA announced on March 22 that 149 federal contract towers would be shuttered beginning April 7.

Federal courts: 20,000 employees could be furloughed for 16 days.

Government Accountability Office: Plans to avoid furloughs, according to The Washington Post. But, the sequester would affect hiring, employee benefits and travel and contract spending, according to Feb. 26 testimony from Comptroller General Gene Dodaro.

Government Printing Office: Will save money by scaling back technology and other investments, but “if necessary, a furlough of GPO’s workforce may also be implemented,” acting Public Printer Davita Vance-Cook testified before a House subcommittee on Feb. 26.

Homeland Security Department: Law enforcement personnel would face furloughs of up to 14 days, DHS Secretary Janet Napolitano said in a Feb. 13 letter to House lawmakers. She did not provide a specific number of employees affected but said it would be a “significant portion” of the department’s front-line law enforcement staff (see Customs and Border Protection and Transportation Security Adminsitration entries).

Housing and Urban Development: A memorandum of understanding signed by agency executives and union officials says seven unpaid furlough days for employees won’t happen until May 24. A union representative told Government Executive that the department would shut down on furlough days, except for the Government National Mortgage Association and the inspector general’s office, neither of which are paid from the HUD salaries and expenses account.

Interior Department: Secretary Ken Salazar has warned about furloughs of thousands of employees. The National Parks Service plans to furlough permanent staff if other cost-savings measures fail.

Internal Revenue Service: Employees could expect a total of five to seven furlough days by the end of the fiscal year on Sept. 30, acting Commissioner Steven T. Miller said in a memo to employees. The furloughs would begin “sometime in the summer, after the filing season ends,” he wrote. Employees would have no more than one furlough day per pay period.

Justice Department: Would furlough hundreds of federal prosecutors, according to the White House. FBI Director Robert Mueller has said $550 million in cuts to the bureau “would have the net effect of cutting 2,285 employees — including 775 agents — through furloughs and a hiring freeze,” according to the FBI Agents Association. The Office of Management and Budget on Feb. 27 said Justice had already sent out formal furlough notices.

Labor Department: Sent 4,700 employees furlough notices on March 5. A document posted on the department’s website said furloughs would begin on April 15, and continue through Sept. 21. All furlough scheduling would begin on March 29, and half of the furlough hours must be taken by July 13.

National Institutes of Health: Director Francis Collins said during a Feb. 25 conference call with reporters that the agency would “do everything we can to avoid furloughs.” He said that furloughs would barely help the agency manage a 5 percent cut since a bulk of the budget was spent on grants and funding for research. Areas that could face the axe include travel and conference spending, Collins said.

National Labor Relations Board: Has issued formal furlough notices, according to OMB.

National Park Service: In a March 20 statement, NPS said that sequestration-related budget cuts would force reduced visitor hours at several major attractions including Independence Hall and the Liberty Bell, the Thaddeus Kosciuszko National Memorial, and the Edgar Allan Poe National Historic Site. The agency noted that the budget cutbacks did not necessitate furloughs of current staff.

NASA: 20,500 contractors could lose their jobs. The agency has not notified federal employees of any furlough possibility, but a spokesman told Government Executive on Feb. 25 that “all possible effects” of sequestration are “still being assessed.”

Nuclear Regulatory Commission: Has ruled out furloughs or salary cuts.

National Nuclear Security Administration: Acting chief Neile Miller said it might not become clear until a month into sequestration whether the agency’s employees will have to be furloughed as a result of the across-the-board federal budget cuts.

Office of Management and Budget: An OMB spokesman told Government Executive that 480 employees subject to administrative furloughs were issued notices on March 7. Employees will be required to take 10 unpaid furlough days for the pay periods between April 21 and Sept. 7.

Office of Personnel Management: Plans to find the required savings through a hiring freeze and administrative cuts, rather than furloughs.

Small Business Administration: The Small Business Administration will rely on staff cuts made through early retirements in 2012 to avoid furloughs, according to an Associated Press report.

Smithsonian: Does not anticipate furloughs.

Social Security Administration: Remains “uncertain” about reducing its employees’ hours, which would save about $25 million per furlough day, according to a Feb. 1 letter to Congress. It will instead try to reach the reduced budget level through attrition.

State Department: Won’t need furloughs, at least through June 30, according to The Washington Post.

Transportation Security Administration: Isn’t planning any furloughs; will rely on a hiring freeze and reductions in overtime, according to a union official.

Treasury Department: Acting Treasury Secretary Neal Wolin told the Senate Appropriations Committee earlier in February that the department would try to avoid furloughs by instituting hiring freezes, and reducing spending on support, travel, training and supplies, but noted that if the sequester takes effect, “most Treasury employees would face furloughs, which would have a cascading effect on employees’ families as well as on the economy at large.” The Internal Revenue Service would be particularly hard hit, he said (see separate IRS entry).

The U.S. Postal Service ranked as the lowest-performing postal agency or commercial operator in a new global, private industry report.

The survey, released by Accenture, evaluated 24 government-operated postal organizations and two private companies that together deliver 75 percent of the world’s mail. The report found USPS burdened by legacy costs high performing agencies in other countries have shed, such as pension burdens and the “restrictive” universal service obligation.

The Postal Service has not adapted to the worldwide trend of declining mail volume by innovating new products and offering new services with flexible pricing, the report found. Mail volume decreased 12.8 percent from 2010 to 2011, according to Accenture, and the agency lost a record $15.9 billion in fiscal year 2012.

The report highlighted countries such as Singapore and Italy for their adaptability in what others have found to be trying times, as they are not bound by the same legislative roadblocks that restrict their U.S. counterpart. Those high-performers have provided new functions, such as financial services, and have used price changes to develop revenue growth.

All product price changes at USPS must be approved by the Postal Regulatory Commission, an independent agency with Postal Service oversight responsibility.

The report also surveyed commercial companies UPS and FedEx, which have effectively provided logistics services, such as sourcing, warehouse management and transportation to its clients. Successful postal agencies, such as Australia Post, have used their retail space for issuing passports, fishing licenses and motor vehicle registration.

While no mail operator has fully and embraced and integrated digital mail into its revenue model, many organizations have developed successful digital products, such as Germany’s Deutsche Post, which allows customers to send a letter using a texted code rather than a stamp.

USPS also lags behind its counterparts in adapting to its customers’ needs. Many countries have instituted 24/7 lockers for customers to pick up packages, same-day delivery — a service USPS is currently developing — return package services and package redirection.

Another burden on USPS, according to Accenture, is its monopoly on individuals’ mailboxes; some countries allow private companies to deliver mail directly to a customer’s home.

The report said the Netherlands and New Zealand have created more flexibility with employee costs by instituting a part-time workforce and a three-day delivery schedule, respectively.

USPS has dramatically reduced its workforce over the last few years through attrition, but still has 495,000 employees.

In most hydraulic fracturing operations, several million gallons of water, together with sand and chemicals, get pumped down a hole to blast apart rock that encases oil or gas. But with water increasingly scarce and expensive around Texas, a few companies have begun fracking with propane or other alternatives.

“We don’t use any water,” said Eric Tudor, a Houston-based official with GasFrac, a Canadian company that fracks with propane gel and butane. “Zip. None.” At a GasFrac operation in South Texas last month, a sticker on one worker’s hard hat showed a red slash through the word H2O.

Water-free fracking still remains an early-stage technology, with potentially higher initial costs than conventional fracking methods. But as lawmakers and oil regulators focus on the large quantity of water used for fracking wells, the concept is getting a closer look. GasFrac has led the way, bringing its propane fracking operations to Texas, and there is talk of using other substances like carbon dioxide or nitrogen.

“We’ve looked at [propane fracking], and I would say that absolutely our industry is open to all possibilities,” Michael Dunkel, the director of sustainable development for Pioneer Natural Resources, said in testimony last month before a joint hearing of the House Energy Resources and Natural Resources committees.

Waterless fracking is “a viable technology for sure,” said David Yoxtheimer, an extension associate with the Marcellus Center for Outreach & Research at Penn State University. However, he noted, there is a reason that companies use water, namely that it is “virtually incompressible” and thus is very effective in bringing pressure against, and ultimately breaking up, rock.

Currently there are no special rules on fracking with propane or other nonwater liquids in Texas, according to Christi Craddick, one of three members of the Railroad Commission of Texas, which regulates the oil and gas industry. The technology is “exciting” but still rare, she said, and no rule changes are on the horizon.

“We’ll see as the technology evolves if our rules need to evolve,” Craddick said last week in an interview.

Tudor, of GasFrac, said his company began working in Texas in 2010, after fracking its first well in Canada in 2008. It has done roughly 100 fracks in Texas so far, he estimated. (Some wells get fracked multiple times.) Much of the work has been in South Texas. A recent job bored into the San Miguel formation, which is a relatively shallow formation in the vicinity of the Eagle Ford Shale. But GasFrac has also done “a couple of prototype fracks” in West Texas, he said.

“We’re just getting started,” Tudor said.

Academics see a number of challenges associated with propane fracking, which few if any companies are experimenting with in Texas, apart from GasFrac. First, according to Yoxtheimer, “you’ve got to truck in a lot of propane,” which can be expensive. He also said the propane “works less effectively in deeper formations where you need to build up more pressure.”

Tudor disagrees that these issues pose problems. He pointed out that the virtually all the propane — which is a byproduct of natural gas processing and oil refining — gets reused. Supplies of propane come from Corpus Christi, he said, and the fuel is “easily available” in South Texas. “We won’t cause any shortages,” he said.

That is an implicit contrast with the considerable water needs of conventional fracking, which already accounts for a double-digit percentage of water use in some rural Texas counties. The water leftover from fracking operations typically does not get reused. Instead, it gets discarded into a disposal well. (The Texas Railroad Commission on Tuesday approved rules to make it easier for companies to recycle water.)

Tudor also said that his company had fracked at depths well over 10,000 feet.

An advantage of propane fracks, said Yoxtheimer, is that they avoid the damage to the oil and gas-producing formation that water can cause.

“If you’re using water, the water can actually block off or at least impede the flow of hydrocarbons,” he said.

Tudor agreed, saying that his company could recover a higher percentage of the oil or gas with propane than with a traditional water frack job. It was this increased production, rather than the reduced use of water, that enticed GasFrac’s customers, he said.

David Burnett, research coordinator at the Department of Petroleum Engineering at Texas A&M University, said that more study is needed. Evidence that the wells fracked with propane are more productive is “sort of anecdotal data,” he said.

As for the risks of handling flammable material like propane, “Our industry is used to handling high-pressure gas and pumping flammable liquids,” Burnett said. “It’s not an issue if the equipment is designed properly.” The risks, he added, are “no more worrisome than a propane tank on the edge of town.”

Tudor said that his company had done 2,000 or more fracks by now, with only one “minor incident in Canada” in which a worker got blisters while some equipment was being shut off. Any leaks, Tuder said, can be “quarantine[d], and “we’re always hooked up to a flare” that can release the gas if needed. The company uses thermal cameras to monitor “hot areas” remotely.

As GasFrac’s technology spreads, other companies are also trying to use less water. In testimony last month before the joint hearing of the House Natural Resources and House Energy Resources committees, Glenn Gesoff, an official with BP who also chairs the water committee of the Texas Oil and Gas Association, told lawmakers that there were “a number of tests going on” in waterless fracking and fracking that uses significantly less water. In addition to propane, he said, work is ongoing with carbon dioxide and nitrogen.

“They’re in the development phase,” Gesoff said. “There are some safety concerns.”

Marathon Oil has begun using a new formula, which it describes as a “guar mix commonly used in ice cream and other food products,” to reduce its water use. Guar is a small bean that can thicken water, and the thicker fluid can carry the sand and other elements “while simultaneously using less water,” Lee Warren, a Marathon Oil spokesman, said in an email.

Over the last 18 months, she said, Marathon has cut its water use by 45 percent per well.

WSJ.com

Cyber Attack Thought to Originate in Russia

A massive cyber attack targeting a European spam-fighting group that slowed some global Internet traffic to a crawl appears to have been launched by a gang of hackers from Russia and neighboring countries, says the head of a Russian firm specializing in defending against such attacks.

By Lukas I. Alpert

MOSCOW–A massive cyber attack targeting a European spam-fighting group that slowed some global Internet traffic to a crawl appears to have been launched by a gang of hackers from Russia and neighboring countries, says the head of a Russian firm specializing in defending against such attacks.

Alexander Lyamin, of Moscow’s Highload Labs, says he believes the same group who have caused trouble around the world with their attack against the non-profit Spamhaus Project Ltd. had earlier launched a series of brief strikes on several top Russian Internet companies as a trial run of their weapon known as a Domain Name System amplification attack.

“We first noticed incidents utilizing this technique a month-and-a-half ago in Russia. It started with a measly 10-20 gigabytes per second, but during the next month it grew to 60 and then 120 gigabytes. Apparently the attackers were growing their network of hacked servers,” Mr. Lyamin said.

The attacks against Spamhaus began on March 19 and appeared to have subsided on Wednesday. Some experts said the attack grew to as large as 300 gigabytes per second, which would make it the largest ever seen, although others–including Mr. Lyamin — dispute that.

A DNS amplification attack works by manipulating the basic system by which the Internet operates wherein a series of domain name system servers convert searches for particular sites, like http://www.wsj.com, to their INS address which is actually a numerical code and makes the connection. The attack utilizes a network of hacked DNS servers to answer fake messages that appear to come from a targeted site with much larger responses. While this cripples the target site, it also severely slows the DNS server which results in bogging down scores of other searches. In the Spamhaus attack, experts have said they believe millions of web surfers were affected.

Spamhaus has accused Dutch Web-hosting company Cyberbunker for being behind the attack in a tit-for-tat retaliation for Spamhaus putting Cyberbunker on a blacklist for allegedly allowing vast amounts of spam to be sent through its servers.

Spokespeople for Cyberbunker and Spamhaus did not immediately respond to messages seeking comment. In a statement on its Website, Spamhaus said “a number of people have claimed to be involved in these attacks. At this moment it is not possible for us to say whether they are really involved.”

While Mr. Lyamin would not name the Russian companies that were the earlier targets because of “the very sensitive nature of this matter,” but said they included services used by Russians every single day.

“The targets were companies with good visibility and big names, but the attacks were only for a short duration of time. We think it was done for bragging rights. Also lots of Internet trash was targeted–porn, scam, drugs, piracy, etc. It was like a child playing Robin Hood or something,” he added.

He said the targeting of Russian companies, and the fact that the attacks tended to begin during daylight hours in Russia’s timezone, led his team to believe the attacks were launched by “a group of Russians or from our closest neighbors.”

Mr. Lyamin says he suspects whoever was behind the spam that Spamhaus had targeted had hired the hackers to launch the attack, which he said is a copycat of one undertaken in October 2010, about 20% smaller by volume of traffic.

“This is not new,” he said. “And I really doubt this is the biggest.”

Will China finally ‘bite’ North Korea?

By Jennifer Lind, Special to CNN

updated 3:09 PM EDT, Thu March 14, 2013

(CNN) — North Korea, China’s longtime ally, has vexed Beijing for years with its rocket launches, nuclear tests, kidnapping of Chinese fishermen and other erratic behavior. Yet, Beijing has run interference at the United Nations to temper punishments against Pyongyang, and has even helped Pyongyang circumvent sanctions.

In the wake of North Korea’s third nuclear test in February, its reckless threats to strike the United States, and now — its decision to scrap the armistice that ended the Korean War — has China finally had enough?

Beijing signed on to sanctions that, in the words of Susan Rice, U.S. ambassador to the United Nations, will “bite and bite hard.” China’s ambassador to the U.N. declared Beijing’s commitment to “safeguarding peace and stability on the Korean peninsula.”

One shouldn’t exaggerate the significance of these recent developments. After all, in the U.N. negotiations over sanctions — this time as before — the Chinese have consistently played the role of watering down the degree of punishment imposed against Pyongyang. And in the past Chinese firms have helped North Koreans evade sanctions. It remains to be seen whether Beijing intends to enforce the new measures.

As rhetoric heats up, North Koreans ready to ‘rain bullets on the enemy’

Beijing also has good reasons that continue to make it reluctant to crack down on its unruly ally. The Chinese perceive that they have a powerful interest in maintaining the status quo. As hard as it is to live with North Korea, Beijing fears it may be harder to live without it.

The Chinese worry that coming down hard on Pyongyang, by cutting off their vital oil or food exports, could trigger a collapse of the North Korean government or other political instability on the peninsula. Beijing’s nightmares include a loose nukes problem and a humanitarian disaster.

Beijing also has fears about the effects of a North Korean collapse on the strategic balance in East Asia. If North Korea collapsed and the two Koreas unified, China might find astride its border a unified, U.S.-aligned Korea hosting American troops.

Chinese analysts also commonly argue that North Korea serves as an important distraction for the U.S. military, which might otherwise train its focus on defending Taiwan.

Thus, despite the nuisance that North Korea regularly makes of itself, for all these reasons, it would be sorely missed by Beijing.

But the days of “lips and teeth” (Mao Zedong’s’s famous statement about the closeness of Sino-North Korean relations) are clearly over. Chinese scholars and analysts increasingly express open frustration with Pyongyang’s behavior. In the wake of North Korean piracy against Chinese fishermen, Chinese microblogs overflowed with outrage.

Most recently, in a meeting of an advisory group to the Chinese government — the Chinese People’s Political Consultative Conference — participants openly debated the question: whether to “keep or dump” North Korea?

The two countries have evolved from vitriolic BFFs to East Asia’s odd couple. When China and North Korea formed their alliance, the countries were both poor, weak, resentful, isolated, and the target of cold-war containment by the United States and its allies.

While North Korea is still that country, China is emphatically not. China’s remarkable four decades of economic reform and growth have catapulted it to wealth and power — China is a global power, with global interests. China has a deep stake in maintaining stability in order to sustain its pathway to prosperity.

China’s relationship with the United States can be tense. But quite unlike in the days of Mao, the two countries are vital trade partners that share a vast array of ties and often overlapping interests.

Beijing also values its relationship with South Korea, which Pyongyang’s provocations seriously jeopardize. Booming trade flows, warm political relations, and deeply intertwined ties have created a relationship that makes it increasingly awkward for Beijing to look away when North Korea murders South Koreans as it did in 2010 (with the sinking of the South Korean vessel Cheonan that killed 46 sailors, and when it shelled Yonpyeong Island).

China is a great power that is increasingly concerned with its standing in the world, and with cultivating “soft power.” Beijing’s support for North Korea’s ruthless, bloody regime — that attacks its neighbors, and brutalizes its people at home — only draws attention to China’s own human rights failings, and undermines China’s soft power.

Because the specter of North Korea’s collapse could potentially destabilize the Korea peninsula, Beijing may continue to shield Pyongyang. But the two countries’ increasingly divergent interests suggest that China’s dissatisfaction with North Korea is only likely to grow.

Update, 12:50 p.m., EDT: The Associated Press believes that this photo from North Korean state media may have been digitally altered, which has certainly happened before. If it were, that would seem to underscore North Korea’s intent to send a specific propaganda message with the photo.

North Korea’s state media agencies have been releasing a slew of photos showing the country’s actual military build-up, which we are meant to understand is a prelude to war. They are probably bluffing, but you have to admire their attention to detail.

Early on Friday, the Korean Central News Agency released the above photo. Reuters, using the KCNA information, passed on the photo with a caption that began, “North Korean leader Kim Jong Un presides over an urgent operation meeting on the Korean People’s Army Strategic Rocket Force’s performance of duty for firepower strike at the Supreme Command in Pyongyang.” According to Reuters, the large chart on the left bears the title, “Strategic force’s plan to hit the mainland of the U.S.”

James Pearson of NK News also looked at the photo, writing in a post that “plans for a strike on the U.S. mainland are clearly – and therefore probably deliberately – visible.” Pearson says that the photo has been published in the North Korean newspaper Rodong, which is widely distributed and often displayed in public.

The chart also appears to show a series of lines shooting out of North Korea and landing on major U.S. cities on the East and West coasts, as well as Hawaii.

Let’s be clear about two things before we go any further. First, as Pearson notes, this is almost certainly for domestic propaganda purposes, which is why it’s displayed so clearly. Second, North Korea does not even have the military capability to strike any American cities, particularly not on the East coast. “Red Dawn” was a work of fiction.

Now to the photos. NK News has kindly granted me permission to repost Pearson’s annotations of the images, which appear to show the plan’s “targets.” (He did ask me to point readers toward the NK News daily e-mail service, which I can recommend without reservation.) Here’s the first, with the chart labeled “U.S. Mainland Strike Plan”:

Pearson then superimposed a Google map of the United States and the Pacific over the chart, which shows pretty clearly that the “targets” line up with major U.S. cities on the West and East coasts.

A charged battery melted March 21 in an Outlander PHEV at a dealership in Kanagawa Prefecture before the vehicle was sold, Mitsubishi Motors said Wednesday.

The automaker also said a lithium-ion battery pack in an i-MiEV electric vehicle caught fire during a charging test at a plant in Kurashiki, Okayama Prefecture, on March 18.

Both batteries were produced by Lithium Energy Japan, a joint venture set up by Mitsubishi Motors, GS Yuasa Corp. and trading house Mitsubishi Corp.

GS Yuasa, based in Kyoto, manufactured the lithium-ion batteries that have been malfunctioning on Boeing Co.’s 787 Dreamliner aircraft.

Ryugo Nakao, director of MMC, told reporters that he cannot comment on whether there are any links between the problems at the automaker and Boeing.

Nakao said it was possible a metallic fragment may have been mixed in during the manufacturing process, causing the battery to short out.

“We will find the cause of the trouble in about one to two weeks,” he said.

Boeing Co. said Wednesday that the fire in a lithium-ion automobile battery built by GS Yuasa is unrelated to overheating that prompted the worldwide grounding of the composite plastic jet.

“We have been assured that the battery in question is fundamentally different from the 787 battery both in its construction processes, design, and chemistry,” said Marc Birtel, a Boeing spokesman.

He said GS Yuasa reported the fire to Boeing, which is working toward government approval of a battery fix that would let the Dreamliner return to commercial service.

Mitsubishi Motors will halt production and sales of the Outlander PHEV for the time being while calling on owners not to charge their vehicles from an external power source.

The company will also consider whether it is necessary to recall the vehicle.

So far, some 4,000 units have been sold since the Outlander PHEV was released in January. The company said nobody was injured in the i-MiEV battery fire.

Mitsubishi Motors is investigating the cause of the fire and production of i-MiEVs and Minicab-MiEV commercial electric vehicles using batteries from Lithium Energy will be suspended.

The 787′s lithium-ion batteries have been under scrutiny by U.S. regulators after one caught fire on a parked jet in Boston and another began smoldering and smoking, prompting an emergency landing at Takamatsu Airport in Kagawa Prefecture.

Boeing performed a test flight March 25 with its proposed fix and plans a second 787 flight in the “coming days” before submitting the changes to the Federal Aviation Administration for approval.

Although Boeing hasn’t found the cause of its lithium-ion battery malfunctions, the Chicago-based company said March 15 that changes to the design and added safeguards, such as a new enclosure and a vent line, will ensure safety.

Boeing, which has a backlog of more than 800 Dreamliners with a list price starting at about $207 million, has halted deliveries until commercial service resumes.

Researchers at Rice University believe a hybrid material they have developed combining vanadium oxide (VO2) and graphene could revitalize the use of lithium-ion (Li-ion) batteries for powering all-electric vehicles.

While Li-ion batteries for hybrid vehicles have enabled that car segment to grow rapidly over the years, the all-electric vehicle has languished as a niche market. This is in large part because Li-ion batteries just don’t have the charge life or short recharging capabilities for them to make sense for most people’s driving habits. The demise of companies that have developed nanomaterials for Li-ion batteries in all-electric vehicles, like A123 Systems and Ener1, underscores just how difficult it has been to get Li-ion batteries to perform at levels necessary to make electric vehicles to take a stronger foothold in the market.

To address this shortcoming, Pulickel Ajayan, professor of engineering at Rice, and his team turned to the well-characterized use of VO2 for cathodes because of their high energy and power density. While vanadium pentoxide has been used in Li-ion batteries, oxides have not been so readily adopted because they have a low electrical conductivity that translates into slow charge and discharge rates.

Ajayan and his team overcame this problem by essentially baking graphene into the VO2, a process that imparted graphene’s high electrical conductivity into the ribbon-like hybrid material that makes up the cathodes. The graphene is able to pass its conductivity to the hybrid material even though the VO2 accounts for 84 percent of the cathode’s overall weight.

The challenge for the researchers was finding the right method for “baking” the graphene into the VO2. In a process described in the journal Nano Letters, the researchers suspended graphene oxide nanosheets along with vanadium pentoxide in water and then heated the suspension for hours in an autoclave. The result was that the vanadium pentoxide had been reduced into vanadium oxide and had taken the form of crystallized ribbons, and the graphene oxide had been reduced to graphene. When characterized, the VO2 ribbons had a web-like coating of graphene and were about 10 nanometers thick, 600 nanometers wide, and tens of micrometers in length.

“These ribbons were the building blocks of the three-dimensional architecture,” said Shubin Yang, lead author of the research, in a press release. “This unique structure was favorable for the ultrafast diffusion of both lithium ions and electrons during charge and discharge processes. It was the key to the achievement of excellent electrochemical performance.”

As far as performance, the cathodes are capable of holding 204 milliamp hours of energy per gram and remained stable after 200 cycles even at high temperatures (75 degrees Celsius).

“We think this is real progress in the development of cathode materials for high-power lithium-ion batteries,” Ajayan said in the press release. “This is the direction battery research is going, not only for something with high energy density but also high power density. It’s somewhere between a battery and a supercapacitor.”

Cyprus details heavy losses for major bank customers

By Karolina Tagaris, Reuters

Mar 31, 2013 01:35 AM EDT

The Washington Post Published: March 30

NICOSIA, Cyprus — Major depositors in Cyprus’ biggest bank will lose around 60 percent of their savings over 100,000 euros, the central bank confirmed Saturday, sharpening the terms of a bailout that has shaken Europe but saved the island from bankruptcy.

Initial signs that big depositors in the Bank of Cyprus would take a hit of 30 to 40 percent — the first time the euro zone has made bank customers contribute to a bailout — had already unnerved investors in European lenders last week.

But the official decree published Saturday confirmed a Friday report that the bank would give depositors shares worth just 37.5 percent of savings over 100,000 euros ($128,200). The rest might never be paid back.

The terms send a clear signal that the bailout means the end of Cyprus as a hub for offshore finance and could accelerate economic decline on the island.

Banks reopened to relative calm Thursday after the imposition of the first capital controls the euro has seen since it was launched a decade ago. Cypriots, however, are angry at the price attached to the rescue — the winding down of the island’s second-largest bank, Cyprus Popular Bank, called Laiki, and the raid on deposits over 100,000 euros.

Under the terms of Saturday’s decree, Laiki’s assets will be transferred to the Bank of Cyprus, where about 22.5 percent of deposits over 100,000 euros will earn no interest. The remaining 40 percent will continue to earn interest, but it will not be repaid unless the bank does well.

Nicosia was filled with crowds relaxing in cafes and bars Saturday, but popular anger was not hard to find. “Europe shouldn’t have allowed this disaster to happen here. Cyprus was paradise, and they’ve turned it into hell,” said Tryfonas Neokleous, a clothes shop owner.

There are no signs that bank customers in other struggling euro-zone countries such as Greece, Italy and Spain are taking fright at the bailout precedent.

“Cyprus is and will remain a special one-off case,” German Finance Minister Wolfgang Schaeuble told Germany’s mass daily Bild. “Savings accounts in Europe are safe.”

What They Told Us: Reviewing Last Week’s Key Polls

Rasmussen Reports

Saturday, March 30, 2013

President Obama is focusing on immigration reform once again, a move signaled by his appearance on two Spanish language television networks this past week.

Just over three weeks after the sequester cuts in the growth of federal spending kicked in, voters feel a bit more strongly that they didn’t cut deep enough. Twenty-two percent (22%) still think the sequester cut the projected growth in spending too much. But twice as many (45%) think the sequester didn’t cut enough.

The Keystone XL pipeline is expected to create several thousand new jobs, but the president has been holding up because of environmental concerns. However, the administration is now expected to give that pro later this year. Most voters continue to support constructing the oil pipeline from western Canada to Texas, and they are more confident this can be done without hurting the environment.

It’s been three years since the passage of the president’s health care law, and it still hasn’t become popular. Half of voters hold an unfavorable opinion of it, and most continue to think the law will push up health care costs.

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